Supatcha Resources Inc. (SAEI)

[patchman]

Instead of attacking the messenger, I challenge anyone here to simply address this simple issue:

SAEI did a forward split earlier this year and did it right after the financing deal. Why?

SAEI now claims that they are planning on repurchasing $3 Million worth of stock they just issued. Why?

If the Insiders own 53% (Restricted Shares) these shares are off-limits to the buyback so what exactly are they planning to buy? Market cap today is $7.9 Million and was $3 Million at the time of the announcement. (47% of 7.9 Million = $3.7 Million so they would be buying back 81% of the float). But when they announced the buyback the float had a value of 47% of 3 Million or $1.4 Million. How can you buy back $3 Million of only $1.4 available? Answer: You can’t unless you pump the PPS.

So where does this money come from? With no operations up and running and with no revenues, the only viable option is financing. Why finance shares to buy back shares? They had $2.2 Million in cash as of August but have yet to mine gold so they still have zero revenues. That means they would have to borrow another $800K and drain their cash to buy back as they say they plan to. How then do they plan on mining gold? Costs money and the financing is already depleted by 50%.

The last buyback I say had the company claim to buy back up to 50% of the float. They too were a money losing company and bought back 1% while diluting another 50%. The 1% buyback was to get out of regulatory trouble because of the way everything was worded. SAEI did not say they were buying back $3 Million they said up to $3 Million.

Companies that invest their time and energy into share structure games without developing the business are major red flags. Buybacks belong to companies that are cash flow positive, not cash flow negative. Buy backs in cash flow negative companies are gimmicks to create a pump. It worked I can see.